Indicate by check
mark whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark
whether the registrant is an accelerated filer (as defined on Rule 12B-2 of the
Exchange Act). Yes o
No ý

There were
27,642,085 shares of the Registrants Common Stock issued and outstanding on
May 6, 2003.

Note
A: The balance sheet has been derived from the audited financial statements at
that date but does not include all of the information and footnotes required by
generally accepted accounting principles in the United States for complete
financial statement presentation.

We are a biopharmaceutical company developing
proprietary therapeutics for the treatment of central nervous system disorders,
cancer, and other serious and life threatening diseases. We operate in one business segment, the
development of biopharmaceutical products.

Basis of
Presentation

The accompanying unaudited condensed consolidated
financial statements include the accounts of Titan and its subsidiaries after
elimination of all significant intercompany accounts and transactions. Certain
prior year balances have been reclassified to conform to the current year
presentation. These financial
statements have been prepared in accordance with generally accepted accounting
principles in the United States for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for a complete financial statements presentation. In the opinion of management,
all adjustments (consisting of normal recurring adjustments) considered
necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2003
are not necessarily indicative of the results that may be expected for the year
ending December 31, 2003.

The preparation of financial
statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect
the amounts reported in the financial statements and accompanying notes. Actual results could differ from those
estimates.

These unaudited condensed consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements and footnotes thereto included in the Titan Pharmaceuticals,
Inc. annual report on Form 10-K for the year ended December 31, 2002.

Revenue Recognition

Contract revenue for research and development is
recorded as earned based on the performance requirements of the contract. Revenue associated with performance
milestones, considered at-risk until the milestones are completed, is
recognized based on the achievement of the milestones as defined in the
respective agreements. Government
grants, which support our research effort in specific projects, generally provide
for reimbursement of approved costs as defined in the grant documents, and
revenue is recognized when associated project costs are incurred.

Operating
Subsidiaries

We conduct a small portion of our operations through
two subsidiaries: Ingenex, Inc. and ProNeura, Inc. At March 31 2003, we owned 81% of Ingenex
(assuming the conversion of all preferred stock to common stock) and 79% of
ProNeura.

5

Recent Accounting
Pronouncements

In January 2003, the
FASB issued Interpretation No. 46 (or FIN 46), Consolidation
of Variable Interest Entities.
FIN 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entitys activities or entitled to receive a majority of the
entitys residual returns or both. A
variable interest entity is a corporation, partnership, trust, or any other
legal structures used for business purposes that either (a) does not have equity
investors with voting rights or (b) has equity investors that do not provide
sufficient financial resources for the entity to support its activities. A variable interest entity often holds
financial assets, including loans or receivables, real estate or other
property. A variable interest entity
may be essentially passive or it may engage in research and development or
other activities on behalf of another company.
The consolidation requirements of FIN 46 apply immediately to variable
interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the
first fiscal year or interim period beginning after June 15, 2003. The adoption of FIN 46 is not expected to have a material impact on our
financial position and results of operations.

2. Stock
Option Plans

We have elected to continue to follow Accounting Principles Board
Opinion No. 25 (or APB 25), Accounting for
Stock Issued to Employees, rather than the alternative method of
accounting prescribed by Statement of Financial Accounting Standards No. 123
(or SFAS 123), Accounting for Stock-Based
Compensation. Under APB
25, no compensation expense is recognized when the exercise price of our
employee stock options equals the market price of the underlying stock on the
date of grant. The following table
illustrates the effect on our net loss and net loss per share if Titan had
applied the provisions of SFAS 123 to estimate and recognize compensation
expense for our stock-based employee compensation.

We calculate net
loss per share using the weighted average common shares outstanding for the
period. For periods ended March 31,
2003 and 2002, the effect of an additional 8,385,477 and 5,218,968 shares,
respectively, related to our authorized and issued convertible preferred stock
and options, were not included in the computation of diluted earnings per share
because they are anti-dilutive.

6

4. Comprehensive
Income

Comprehensive
income is comprised of net loss and other comprehensive income. The only component of other comprehensive
income is unrealized gains and losses on our marketable securities. Comprehensive loss for the three months
ended March 31, 2003 and 2002 were $6.7 million and $6.0 million, respectively.

The following discussion should be read in conjunction
with the Consolidated Financial Statements and Notes thereto beginning on page
F-1 in this report.

The following discussion contains certain
forward-looking statements, within the meaning of the safe harbor provisions
of the Private Securities Reform Act of 1995, the attainment of which involves
various risks and uncertainties. Forward-looking statements may be identified
by the use of forward-looking terminology such as may, will, expect,
believe, estimate, plan, anticipate, continue, or similar terms,
variations of those terms or the negative of those terms. Our actual results
may differ materially from those described in these forward-looking statements
due to, among other factors, the results of ongoing research and development
activities and pre-clinical testing, the results of clinical trials and the
availability of additional financing through corporate partnering arrangements
or otherwise.

We are a biopharmaceutical company developing proprietary therapeutics
for the treatment of central nervous system disorders, cancer, and other
serious and life threatening diseases.
Our product development programs focus on large pharmaceutical markets
with significant unmet medical needs and commercial potential.

Our internal resources are currently focused primarily on clinical
development of the following products:

 Spheramine for the treatment of late
stage Parkinsons disease

 Pivanex for the treatment of non-small
cell lung cancer

 Gallium maltolate for the treatment of
several cancers

 Probuphine for the treatment of opiate
addiction

We are directly developing our product candidates and also utilizing
corporate partnerships, including a collaboration with Schering AG, Germany
(Schering) for the development of Spheramine to treat Parkinsons disease. Spheramine development is primarily funded
by Schering. Iloperidone is licensed to
Novartis Pharma AG (Novartis) for development and commercialization in the
treatment of schizophrenia and schizoaffective disorders. Novartis continues to evaluate the next
steps for the development of iloperidone, including sublicensing the compound
to another company, continuing development, or returning product rights to
Titan.

At this time, we are not devoting any additional internal resources to
the monoclonal antibodies CeaVac, TriAb, and TriGem. These treatments are
currently being studied in certain cancers by national oncology cooperative
groups funded by the National Cancer Institute.

8

The following
table provides summary status of our products in development:

*Further development under review

Our products are
at various stages of development and may not be successfully developed or
commercialized. We do not currently have any products being commercially
sold. Our proposed products will
require significant further capital expenditures, development, testing, and
regulatory clearances prior to commercialization. We may experience unanticipated problems relating to product
development and cannot predict whether we will successfully develop and
commercialize any products. An
estimation of product completion dates and completion costs can vary significantly
for each product and are difficult to predict.
Various statutes and regulations also influence our product development
progress and the success of obtaining approval is highly uncertain. For a full discussion of risks and
uncertainties in our product development, see Risk Factors  Our products are at various stages of
development and may not be successfully developed or commercialized in our
2002 annual report on Form 10-K.

Results of Operations

Revenues for the first quarter 2003 were approximately $26,000 compared to $2.3 million for the same quarter
in 2002. Revenue for the first quarter
2002 primarily consisted of a one-time $2.0 million milestone payment from
Schering following successful completion of the Phase I/II study of Spheramine
in the treatment of late-stage Parkinsons disease, and Scherings decision to
initiate randomized clinical testing of Spheramine for the treatment of
patients with late-stage Parkinsons disease.

Research and
development expenses for the first quarter 2003 were $5.6 million, compared to
$7.5 million for the same quarter in 2002, a decrease of 25%. This decrease resulted primarily from the
completion of the Phase III clinical study of CeaVac in Dukes D colorectal
cancer, and our planned strategic focus on the clinical development of four
product programs: Spheramine, Pivanex, gallium maltolate and Probuphine.

General and
administrative expenses for the first quarter 2003 were $1.4 million compared
to $1.2 million for the same quarter in 2002.
The slight increase resulted primarily from increased insurance costs.

9

Other income, net
of amortization and other expenses, for the first quarter 2003 was $0.5 million
compared to $1.4 million in the first quarter 2002. The decrease, primarily in interest income, was a result of lower
interest rates and a lower balance of cash and marketable securities.

Our net loss for
the first quarter 2003 was $6.5 million, or $0.24 per share, compared to $5.0
million, or $0.18 per share, for the same quarter in 2002.

Liquidity and Capital Resources

We have funded our operations since inception through our initial public
offering and private placements of our securities, as well as proceeds from
warrant and option exercises, corporate licensing and collaborative agreements,
and government sponsored research grants.
At March 31, 2003, we had $66.1 million of cash, cash equivalents, and
marketable securities.

Our operating activities used $7.2 million and $7.8 million of cash in
the first quarter 2003 and 2002, respectively.
Uses of cash in operating activities were primarily to fund product
development programs and administrative expenses. We have entered into various agreements with research
institutions, universities, and other entities for the performance of research
and development activities and for the acquisition of licenses related to those
activities. The aggregate commitments
we have under these agreements, including minimum license payments, for the
next 12 months is approximately $0.9 million. Certain of the licenses require us to pay
royalties on future product sales, if any.
In addition, in order to maintain license and other rights while
products are under development, we must comply with customary licensee
obligations, including the payment of patent related costs and diligent efforts
in product development.

We expect to continue to incur substantial additional operating losses
from costs related to continuation and expansion of product and technology
development, clinical trials, and administrative activities. We believe that we currently have sufficient
working capital to sustain our planned operations through 2005.

Based on the
evaluation by Titan under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of Titans disclosure controls
and procedures pursuant to Rule 13a-14 of the Securities and Exchange Act of
1934, as amended (the Exchange Act), as of a date within 90 days of the filing
date of this quarterly report, our Chief Executive Officer and Chief Financial
Officer have concluded that the disclosure controls and procedures are
effective in ensuring that information required to be disclosed by Titan in the
reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time period specified by the Securities and
Exchange Commissions rules and forms.

Subsequent to the
date of their evaluation, there were no significant changes in Titans internal
controls or in other factors that could significantly affect these controls nor
were any corrective actions required with regard to significant deficiencies
and material weaknesses.

1.I
have reviewed this quarterly report on Form 10-Q of Titan Pharmaceuticals,
Inc.;

2.Based
on my knowledge, this quarterly report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this quarterly
report;

3.Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;

4.The
registrants other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:

a)designed
such disclosure controls and procedures to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in
which this quarterly report is being prepared;

b)evaluated
the effectiveness of the registrants disclosure controls and procedures as of
a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and

c)presented
in this quarterly report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;

5.The
registrants other certifying officers and I have disclosed, based on our most
recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors:

a)all
significant deficiencies in the design or operation of internal controls which
could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any
material weaknesses in internal controls; and

b)any fraud,
whether or not material, that involves management or other employees who have a
significant role in the registrants internal controls; and

6.The
registrants other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

1.I
have reviewed this quarterly report on Form 10-Q of Titan Pharmaceuticals,
Inc.;

2.Based
on my knowledge, this quarterly report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this quarterly
report;

3.Based
on my knowledge, the financial statements, and other financial information
included in this quarterly report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this quarterly report;

4.The
registrants other certifying officers and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:

a)designed
such disclosure controls and procedures to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in
which this quarterly report is being prepared;

b)evaluated
the effectiveness of the registrants disclosure controls and procedures as of
a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date); and

c)presented
in this quarterly report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;

5.The
registrants other certifying officers and I have disclosed, based on our most
recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors:

a)all
significant deficiencies in the design or operation of internal controls which
could adversely affect the registrants ability to record, process, summarize
and report financial data and have identified for the registrants auditors any
material weaknesses in internal controls; and

b)any fraud,
whether or not material, that involves management or other employees who have a
significant role in the registrants internal controls; and

6.The
registrants other certifying officers and I have indicated in this quarterly
report whether or not there were significant changes in internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.